WhitepaperMarch 2018, Version 3.0

Denis petrovcic, Viktor Brajak

Tokenized commercial real estate markets wil l lower the entry barr ier and open access to direct CRE investments for anyone with an internet connection.

Blockchain technology and smart contracts are already transforming the way we use the world wide web. As we transit from an internet of information to an internet of value, new and establ ished networks wil l evolve into decentral ized peer-to-peer value exchange markets .

With global commercial real estate valued at roughly 50 tr i l l ion USD, tokenised CRE is set to become one of the biggest onl ine exchange markets, as tokenizat ion and fr ict ionless trading increase l iquidity, and this added qual i ty wil l unlock new value of the underlying asset .

This paper descr ibes in part Blocksquare, a plug & play system for onl ine real estate platforms to tap into the upcoming tokenised real estate markets .

To understand blockchain one must first understand society.

1/ Blockchains wil l replace networks with markets .

2/ Humans are the networked species. The f i rst species to network across genetic boundaries and thus seize the world.

3/ Networks al low us to cooperate when we would otherwise go i t alone. And networks al locate the fruits of our cooperat ion.

4/ Overlapping networks create and organize our society. Physical , digital , and mental roads connecting us al l .

5/ Money is a network. Rel igion is a network. A corporat ion is a network. Roads are a network. Electr ic i ty is a network. . .

6/ Networks must be organized according to rules. They require Rulers to enforce these rules. Against cheaters .

7/ Networks have “network effects .” Adding a new part ic ipant increases the value of the network for al l exist ing part ic ipants .

8/ Network effects thus create a winner-take-al l dynamic. The leading network tends towards becoming the only network.

9/ And the Rulers of these networks become the most powerful people in society.

10/ Some are run by kings and pr iests who choose what is money and law, sacred and profane. Rule is closed to outsiders and based on power.

11/ Many are run by corporat ions. The social network. The search network. The phone or cable network. Closed but in i t ial ly meritocrat ic .

12/ Some are run by el i tes . The university network. The medical network. The banking network. Somewhat open and somewhat meritocrat ic .

13/ A few are run by the mob. Democracy. The Internet . The commons. Open, but not meritocrat ic . And very ineff ic ient .

14/ Dictatorships are more eff ic ient in war than democracies. The Internet and physical commons are overloaded with abuse and spam.

15/ The 20th century created a new kind of network - market networks. Open AND meritocrat ic .

16/ Merit in markets is determined by a commitment of resources. The resource is money, a form of frozen and trade-able t ime.

17/ The market networks are t i tans. The credit markets . The

stock markets . The commodit ies markets . The money markets . They break nat ions.

18/ Market networks work where there is a commitment of money. Otherwise they are just mob networks. The appl icat ions are l imited.

19/ Unti l now.

20/ Blockchains are a new invention that al lows meritor ious part ic ipants in an open network to govern without a ruler and without money.

21/They are merit-based, tamper-proof, open, vot ing systems.

22/ The meritor ious are those who work to advance the network.

23/ As society gives you money for giv ing society what i t wants, blockchains give you coins for giv ing the network what i t wants .

24/ I t ’s important to note that blockchains pay in their own coin, not the common (dollar ) money of f inancial markets .

25/ Blockchains pay in coin, but the coin just tracks the work done. And different blockchains demand different work.

26/ Bitcoin pays for securing the ledger. Ether ium pays for (executing and ver i fy ing) computat ion.

27/ Blockchains combine the openness of democracy and the Internet with the merit of markets .

28/ To a blockchain, merit can mean security, computat ion, predict ion, attent ion, bandwidth, power, storage, distr ibut ion, content . . .

29/ Blockchains port the market model into places where i t couldn’t go before.

30/ Blockchains’ open and merit based markets can replace networks previously run by kings, corporat ions, ar istocracies, and mobs.

31/ I t ’s nonsensical to have a blockchain without a coin just l ike i t ’s nonsensical to have a market without money.

32/ I t ’s nonsensical to have a blockchain control led by a sovereign, a corporat ion, an el i te, or a mob.

33/ Blockchains give us new ways to govern networks. For banking. For vot ing. For search. For social media. For phone and energy gr ids.

34/ Networks governed without k ings, pr iests, el i tes, corporat ions and mobs. Networks governed by anyone with merit to the network.

35/ Blockchain-based market networks wil l replace exist ing networks. Slowly, then suddenly. In one thing, then in many things.

36/ Ult imately, the nat ion-state is just a network (of networks) .

FIN/ Thank you, Satoshi Nakomoto. And to al l the shoulders that Satoshi stands upon.

tweet storm by Naval ravikant1

1 https://twitter.com/naval/status/877467629308395521

BlockchaiNs Will UpGraDe NetWorks to Markets

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Blockchains wil l replace networks with markets 2

Why Blocksquare? 4

Updating Commercial Real Estate 5

Unlocking Value 5

Sharing Economy: Impacts on commercial real estate 6

Establ ishing a new category 6

Commercial real estate Property Types 7

Mult i-device Development 8

challeNGes 9Real-World Assets Tokenizat ion 10

Liquidity Premium: Unlocking Value 10

Diversif icat ion Limits 11

Real Estate 3 .0 : 11

Opening Access 11

Remote Property Management 12

Network scal ing and user adoption 12

ValUe propositioNs 13The Blocksquare System 14

Graphic Overview 15

PropToken Standard 16

Blocksquare 16

PropTokens (BSPT) 16

Token Flow 17

PropToken Generat ion (PTGE) 17

Blocksquare tokens (BST) 17

Proof of Tit le Protocol (POT) 18

PropToken Governance 19

Blocksquare Network Reserve Fund 19

PropToken Pr ivat izat ion 21

PropToken Remunerat ion 22

PropToken Decentral ized Exchange 22

PropToken Right-To-Use 22

Blocksquare Network Part ic ipants 23

fiNaNcials 24Revenue streams 25

Business Model 26

Startup Funding 27

presale 27

ser ies a 27

future ser ies 27

Mult i-ser ies token sale model 28

BST token detai ls 29

Use of funds 30

The founders 31

Founding partner : Medius inc 32

coNteNts

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Early movers on the blockchain real estate vert ical have proved there is strong interest in fractional real estate markets. Platforms such as Propy, Brickblock, Real and others show us the platform layer of this market. However, in order for this new market to start , a system that can scale through already established routes and incetivise those who wish to part icipate in i t ’s creation is needed.

Blocksquare is a plug & play set of protocols, APIs and tools for s imple property tokenisation. Similar to how Str ipe offers easy onl ine payment processing for e-commerce sites, Blocksquare is building a system so onl ine real estate platforms can tap into the upcoming tokenised real estate market.

WhY BlocksQUare?Platforms will choose to integrate Blocksquare because:

1 . i t wil l enable them to leverage blockchain technology at minimal cost ,

2 . the system can be adapted to local regulatory rules,3. the PropToken standard encourages market

part icipation,4. is a system that puts trust at i ts core.

Blocksquare targets cl ients that already deal with real estate onl ine and provides them the required technological infrastructure to embark into a new market of tokenised commercial real estate.

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markets in these areas, as well as Asia, represent a potent ial ly huge market . The report est imates that i f the quantity and value of commercial space in these regions were to reach the current global average per head of populat ion, the total value of commercial real estate globally would r ise by 54%.

Wil l blockchain technology produce PropTech 3 .0, the next wave of innovat ion in real estate? Since 2012, real estate tech companies have raised USD 6.4 bi l l ion in funding and 4 companies have been minted to the unicorn club. This act iv i ty indicates real estate is in need of a big update, and a 95-page report written by Andrew Baum and released by Saïd Business School , University of Oxford takes an expansive look at PropTech and REtech. The report f indings detai l the changes facing the real estate industry and blockchain is already taking a big part .

The real estate industry can use blockchain or distr ibuted ledger technology to bui ld appl icat ions using smart contracts and develop services that br ing the benefits of a new technology both to i tself and to the mainstream. The main proponents of blockchain for real estate are:

• more information, avai lable instantaneously;• less error, less dupl icat ion, less human ineff ic iency

leading to much lower costs ;• greater transparency (through consensus and

distr ibut ion) of pr ices and contracts ;• potent ial ly reduced transact ion t imes; and• greater market l iquidity and turnover.

While the implementat ion of blockchain technology for certain use cases is to be considered, in i t iated and accepted by government authorit ies (e .g . t i t le registrat ion, land registry systems, cadastral system, land tenure systems, notary services etc. ) , other appl icat ions may be bui l t on top of the currently avai lable systems already in place.

Blocksquare is building the needed infrastructure to give CRE professionals simple tools for CRE property tokenization, enabling fractional ownership, giving users effective diversif ication options, increasing l iquidity of real estate assets.

Global real estate accounts for 60% of al l mainstream assets and was valued at roughly USD 219 tr i l l ion in 2015, according to calculat ions by internat ional real estate adviser, Savi l ls . 1 Resident ial property const i tutes the major i ty of the total value of global property, with CRE representing about 25% or USD 54 tr i l l ion.

Est imations suggest the i l l iquidity discount of real estate is somewhere around 10-30%.2 This represents a huge amount of value and therein l ies great promise. I f we were to unlock 10% of the value of global CRE by introducing tokenizat ion and fr ict ionless trading, that would amount to over USD 5 tr i l l ion. Now, token generat ion to represent ownership, access and/or governance claims on a tradit ional asset does not impact l iquidity per se. I f a token is not trading enough, i t is st i l l relat ively i l l iquid. Improvement in l iquidity comes from increases in market depth, meaning more part ic ipants and more trade.

Important to note that almost half of the world’s commercial property wealth is in North America, with 28% in Europe and just 5% in Lat in America, the Middle East and Afr ica combined. The report highl ights that the creat ion of new commercial real estate

1 http://pdf.euro.savills.co.uk/global-research/around-the-world-in-dollars-and-cents-2016.pdf2 http://people.stern.nyu.edu/adamodar/pdfiles/country/illiquidity.pdf

UpDatiNG coMMercial real estate

UNlockiNG ValUe

UsD 5 trillion

UsD 54 trillion

UsD 217 trillion

The reason tokenization improves liquidity, is because it enables deeper markets. Since tokens are highly divisible and global, the potential number of market participants is substantially higher than what we see today in markets for illiquid assets.

- Stephen McKeon

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Creat ing a new category to challenge the status quo and start something truly new and or iginal is one of the most diff icult undertakings in business. Blocksquare is working to change how we perceive real estate investments. We foresee a future where invest ing in tokenized CRE propert ies wil l replace tradit ional real estate investment opt ions of today. Much l ike Uber and Airbnb have created travel products that al low people to f ind r ides or places to stay with an ease that was previously unheard of, Blocksquare is set to open global CRE to anyone with an internet connection.

Shar ing economy companies have truly changed how we vis i t dest inat ions, how we stay there, and how we move around. The shar ing economy has taken off in al l sorts of niches from r ideshar ing, apartment or home lending, peer-to-peer lending, resell ing, coworking, talent-shar ing. In the last century, owning things was the marker of the middle class. Those who had more money could own more things.

Today however, as mil lennials enter adulthood, the trend seems to be for them to own less and the advent of the digital and shar ing economies have made this much easier. Even so, recent data from Apartment List shows that , although 80 percent of US mil lennials would l ike to purchase real estate, very few are in a good posit ion to actually buy, largely because they have not enough saved. 1

This could imply that the need for rental homes wil l further cont inue to increase, as the tradit ional model to becoming homeowner is not within reach for the major i ty. E ither way, the fact is , any shar ing economy requires assets in order to run (e .g . Uber →cars, Airbnb →homes) , and these assets need someone to

1 https://www.apartmentlist.com/rentonomics/american-dream-homeownership-delayed-millennial-generation/

acquire them and hold ownership. Today most of these assets are owned by a small number of part ic ipants of a part icular shar ing economy, but in a not so distant future, blockchain, tokenizat ion and fract ional ownership wil l enable a much wider range of users to own a small part of assets in a given shar ing economy. At scale, this wil l represent a big boost , adding many new assets to any shar ing economy platform.

estaBlishiNG a NeW cateGorY

Tokenizing relatively illiquid assets and creating a market in which to trade these tokens can reduce the illiquidity discount substantially by reducing frictions to trade. Traditional assets will tokenize because they will lose the liquidity premium if they don’t.

- Stephen McKeon

shariNG ecoNoMY: iMpacts oN coMMercial real estate

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In recent years, commercial real estate has increasingly migrated into the mainstream as a sought after asset . Previously long considered an “alternat ive asset” class that f loated on the per iphery of tradit ional investments such as stocks, bonds and mutual funds, commercial real estate is today the third largest asset class.

There are four basic groups in real estate general ly v iewed as off ice, industr ial , retai l and mult i family. With numerous other property types outside of the core four, including hotels , self-storage, medical off ice, senior housing, student housing and land, among others, commercial real estate is vast in almost every sense.

Although the Blocksquare protocol can potentially accommodate any type of real estate, we believe it wil l be f irst used by platforms focused on the growing market of professional short-term rentals ( i .e . f lats for Airbnb) . This market has grown in recent years and today offers a well established infrastructure of local on-site property management services that take the work out of renting, analytical data providers that help evaluate market opportunit ies and a marketing edge that resonates to a broader audience.

coMMercial real estate propertY tYpes

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challeNGes

involves tokeniz ing real-world assets l ike real estate is to ensure that the digital token stays l inked to the real-world asset .

Blocksquare provides a solut ion to this challenge by introducing i ts Proof of Tit le protocol to l ink smart contracts to the underlying real estate property.

Please refer to chapter Proof of T i t le Protocol for further detai ls .

Tokenizat ion is the process of convert ing r ights to an asset into a digital token on a blockchain and is expected to have a ser ious impact on l iquidity across mult iple asset classes in the decade to come.

Thousands of years of property ownership has led to a wide var iety of types of ownership and control such as holding property on behalf of another person. The detai ls depend on the jur isdict ion, type of law, asset , and the r ights intended to be transferred. Today, real-world assets l ike stocks, gold, oi l or real estate are diff icult to physical ly transfer or subdivide, so buyers and sellers choose to trade paper that represents some or al l of the asset . But paper and complex legal agreements are cumbersome, diff icult to transfer and can be hard to track.

Blockchain and smart contracts offer the required technology to evolve to a digital system l inking tokens to a real-world asset . The goal is to achieve the security, speed and ease of transfer of cryptocurrencies (e .g . Bitcoin, Ether) , combined with a real-world asset l ike real estate. In a digital system l ike Bitcoin or Ethereum there is always consistency. Transact ions obey the rules of the software and there are no exceptions. In the real world, there are often exceptions. Therefore the key challenge for a system that

Liquidity is a complex mult idimensional concept that manifests i tself in a number of ways, and has no s ingle, general ly accepted def init ion or meas ure. 1 Keynes’ descr ipt ion of a l iquid asset “being more certainly real isable at short not ice without loss” is probably the most frequently cited one. In this sense, l iquidity can be viewed in terms of the transact ion pr ice and transac t ion t ime. Typical ly, investors who are forced to sel l within a certain t ime l imit may be able to do so at the cost of a lower effect ive sale pr ice, while a higher pr ice could be achievable i f a longer market ing period had been accepted. Moreover, l iquidity in pr ivate markets is associated with uncertainty regarding the t ime and the value of the transact ion.

Most of the l i terature on real estate l iquidity 2focuses only on certain aspects of the problem, namely:

• Transact ion intensity• Transact ion cost• Durat ion of the sale process ( t ime on market)• Uncertainty associated with the sale process

1 LizieriandBond(2004)reviewdifferentdenitionsinthenancialandrealestateliterature.2 Seee.g.LizieriandBond(2004)orHoesliandLizieri(2007).

In s impl i f ied terms, l iquidity descr ibes the degree to which an asset or security can be quickly bought or sold in the market without affect ing the asset ’s pr ice. Market l iquidity refers to the extent to which a market , such as a country ’s stock market or a c ity ’s real estate market , al lows assets to be bought and sold at stable pr ices. Cash is the most l iquid asset , whi le real estate, f ine art and collect ibles are al l considered relat ively i l l iquid. 3 I l l iquid does not necessar i ly mean untradeable, but rather s ignif icantly costly to trade. The cost of trading i l l iquid assets is referred to as the ‘ l iquidity premium’ or correspondingly ‘ i l l iquidity discount ’.

Global real estate value was recently est imated at USD 217 tr i l l ion. 4 Roughly 25% of that total , USD 54 tr i l l ion, is commercial . I f Blocksquare were to unlock 10% of their current l iquidity premium, that is over USD 5 tr i l l ion. The i l l iquidity discount on global commercial real estate is therefore about 30–40x the aggregate value of the current cryptocurrency market .

3 http://www.investopedia.com/terms/l/liquidity.asp4 http://www.savills.co.uk/research_articles/188297/198667-0

real-WorlD assets tokeNizatioN

liQUiDitY preMiUM: UNlockiNG ValUe

How big is the illiquidity discount? Financial economists have attempted to measure the illiquidity discount in a variety of ways. A common rule of thumb is 20–30%. This represents a huge amount of value and therein lies great promise.

- Stephen McKeon

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Real estate invest ing is a concept that ’s as old as the idea of property ownership i tself. Land, l ike any other valuable resource, can be bought, ref ined, repackaged, marketed, and sold, or rented out for a prof i t . What has begun to change in the last years are the tools and techniques that are becoming avai lable for anyone invest ing in real estate assets . As a result , real estate crowdfunding platforms, also referred to as RECF platforms, have become an increasingly popular source for both f inancing and invest ing in real estate assets .

While al l th is represents a great step in opening access to real estate investments, a more in depth analysis of major RECF platforms reveals inf lexibi l i t ies and l imitat ions these platforms are unable to overcome, due to the non-digital nature of the underlying complex and cumbersome structure of legal agreements making these real estate assets, even though fract ional , di f f icult to trade.

The Blocksquare protocol and network of smart contracts deployed on the Ethereum blockchain overcomes these l imitat ions as accounting is programmed into the network i tself. What ’s more, i t opens access to the major i ty crowd of internet users, al lowing anyone regardless of budget to part ic ipate in tokenized real estate propert ies in a decentral ized manner.

Real estate is a challenging asset class when i t comes to r isk management because of i ts complexit ies and mult iple levels of r isk . The number of propert ies to hold to achieve a well-diversif ied real estate property portfol io presents a puzzle, as the est imated number is considerably higher than that seen in actual portfol ios . By spreading across real estate markets that are poorly correlated, the r isk on portfol io level can be reduced. To some degree, these benefits can be real ised by invest ing in mult iple real estate sectors within a s ingle market , although correlat ions across sectors tend to be relat ively high. However, a s ignif icant further enhancement of r isk-adjusted returns is possible through invest ing across global real estate markets .

Inst i tut ional investors are experienced and progressive when i t comes to bui lding a global real estate portfol io . Most inst i tut ional investors choose a combinat ion of direct real estate, non-l isted real estate funds and real estate equit ies for the purpose of their global real estate al locat ion. The goal is portfol io diversif icat ion with direct real estate investments usually composing the major i ty of their portfol io . Inst i tut ional investors also have a long t ime horizon and a myriad of resources at their disposal to opt imize their asset diversif icat ion, something most individuals can never achieve as i t requires a considerable portfol io s ize to begin with .

Blocksquare’s network of tokenized real estate offers individual investors to repl icate inst i tut ional real estate diversif icat ion strategies within their own investment portfol ios, regardless of portfol io s ize. Furthermore, with the abi l i ty to freely trade these tokenized assets on a decentral ized market , investors are not bound to long-term l iabi l i t ies as with non-tokenized real estate investments making real estate suitable for the needs of today’s investors and the demand for greater l iquidity.

real estate 3.0:opeNiNG access

DiVersificatioN liMits

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The best way to manage commercial property remotely is to enl ist a rel iable local property manager. A competent property manager can add signif icant value to any type of real estate investment . The benefits of hir ing a professional property management company al low landlords to receive higher qual i ty tenants, shorter vacancy cycles, better tenant retent ion, t ighter rent collect ion process, lower maintenance and repair costs and less legal problems. A ski l led property manager may also increase the value of real estate property through preventat ive maintenance systems that catch and deal with maintenance and repair issues early on or by offer ing suggest ions and feedback on upgrades and modif icat ions.

As we see home and bui lding automation technology solut ions coming to the market, the tasks associated to property management are becoming less demanding and with the Internet of Things at our doorsteps, smart real estate propert ies wil l make remote property management even easier. I t is not hard to envis ion a future where propert ies are part of a larger learning ecosystem, that ’s aware of users, their habits and movements, using information from interconnected devices and sensors to not only enhance user experience, but also monitor and del iver accurate usage and performance data directly to property managers and landlords.

When tokeniz ing real estate property, hundreds or even thousands of stakeholders may be involved. Furthermore, property token

holders may change frequently and are l ikely to be scattered around the globe. This suggests a property manager is not only welcomed, but considered necessary.

To deploy a PropToken contract , a property management company needs to be selected by the PropToken issuer (Platform provider) . Management companies wil l be able to register to provide their locat ion based services within the network by holding BST tokens.

Blocksquare PropToken contracts incorporate a 2% transact ion fee. This fee is then spl i t amongst network part ic ipants to keep incentives al igned. Half of the transact ion fee goes to the Blocksquare reserve fund to f inance upkeep and maintenance of the real estate propert ies in the network, while the other half is spl i t between PropToken issuer, PropToken f i rst buyer and Blocksquare Inc.

To propel the new market of tokenized CRE, the PropToken contracts have been designed to distr ibute a port ion of the fee to both token issuers and ‘ f i rst buyers’ - users that purchased PropTokens (BSPTs) dur ing a PropToken generat ion event . Because the fee is coded into the PropToken contract , f i rst buyers wil l always benefit f rom any trading act iv i ty where the specif ic PropToken is involved. This means they earn their share from each trade even i f they do not hold the PropToken anyomore.

Gradually as adoption grows, this fee to “f i rst buyers” may be f i rst lowered and then omitted in the PropToken standard.

reMote propertY MaNaGeMeNt

NetWork scaliNGaND User aDoptioN

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ValUe propositioNs

the BlocksQUare sYsteM

Building blocks of Blocksquare:

• PropToken standard smart contracts• Proof of Tit le protocol (protocol to l ink a PropToken

contract to land registry data)• BST token (access, ut i l i ty, currency, l icense)• Blocksquare Network Reserve Fund (to cover

ongoing costs)• Decentral ized exchange (to buy/sell PropTokens)• Blocksquare Foundation (non-prof i t organisat ion for

t i t le annotat ions)• Blocksquare Inc. (network operator)

Similar to how Amadeus or Sabre systems provide the infrastructure for a ir l ine companies to sel l t ickets trough retai lers, where skyscanner, momondo etc. are aggregators to faci l i tate end user pr ice comparis ion, Blocksquare is developing the infrastructure layer and standard for real estate tokenizat ion and fract ional ownership so onl ine real estate businesses can be offered a low cost plug & play protocol to open real estate investments for anyone, everywhere.

We leverage the Ethereum blockchain to design a system to faci l i tate the establ ishment and growth of a new global market of tokenized real estate, with the main dr iver essent ial ly coming down to monetary incent ive distr ibut ion of the currently locked-in value of l iquidity premiums to market part ic ipants . To increase trust in the tokenizat ion process of real-estate assets, the Proof of Tit le protocol is used to l ink PropToken smart contracts to the underlying real estate property.

Part ic ipat ion in PropTokens is granted in exchange for ETH, but a separate token is used to remunerate generated rent - the BST token. The pr imary reason for the introduct ion of the BST token is to reward early adoption, but i t also serves as a level-up system. Holding BST grants users interact ion with the Blocksquare network (e .g . the more BST one holds, the more PropToken contracts he or she can interact with) .

PropTokens, being deployed on the Ethereum network, can inherently be stored in any ERC20 compatible wallet giv ing PropToken holders ful l control of their assets .

The appeal of real estate tokenizat ion l ies within the abi l i ty to freely transact onl ine, effect ively increasing l iquidity of the underlying asset by mult iples. To bui ld a PropToken marketplace, Blocksquare is developing on top of the decentral ized exchange protocol 0x. 0x supports al l Ethereum-based assets that adhere to the ERC20 token standard. 1

To minimize business r isk regarding development of the Blocksquare network, a separate l imited l iabi l i ty company Blocksquare Inc. wi l l be incorporated upon securing development funding. The purpose of Blocksquare Inc. is to employ al l necessary means to develop, grow and advert ise the Blocksquare system.

1 https://github.com/0xProject

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Blocksquare opens a market of tokenised commercial real estate

properties to anyone with an internet connection.

15

PropTokens are Ethereum-based assets that adhere to the ERC20 token standard. Even though each PropToken represent a different real estate property, they al l have the same structure:

• PropToken name: BSPT-[country code]-[12-digit sequential number]

• Total token supply ( f ixed) : 100,000 tokens• Transact ion fee

The PropToken nomenclature fol lows a Blocksquare set standard. BSPT offers at-a-glance ident i f icat ion of the token being issued by Blocksquare. The [country code] part makes use of the ISO 3166-1 alpha-3 off ic ial ly assigned code elements. 1 The 12-digit sequential number is automatical ly assigned to each new PropToken in a given country. Examples:

BSPT-SVN-000000000001, BSPT-SVN-000000000002, BSPT-SVN-000000000003, . . . ; BSPT-GER-000000000001, BSPT-GER-000000000002,… ; BSPT-USA-000000000001, BSPT-USA-000000000002, . . . ;

The PropToken total supply is f ixed to 100,000 BSPT tokens. A property worth USD 1 ,000,000 would therefore result in the pr ic ing

1 https://en.wikipedia.org/wiki/ISO_3166-1_alpha-3#Officially_assigned_code_elements

of USD 10 per BSPT token.

Whenever a transact ion of BSPT occurs, a fee is paid by the transact ion in i t iator to the PropToken issuer, f i rst buyer, network reserve fund and Blocksqaure Inc. The fee is paid in BSPT and the execution of the transact ion fee is programmed directly into the PropToken contract . To prevent inf in i te accumulat ion of fee collect ion, Blocksquare’s account is exempted of this fee.

To learn more about the transact ion fee structure, please refer to chapter Revenue streams.

PropTokens are smart contracts deployed on the Ethereum blockchain. Ethereum smart contracts are programs run on a blockchain, with unique attr ibutes compared to other forms of software. The program itself is recorded on the blockchain, which gives i t character ist ics l ike permanence, censorship resistance and irreversibi l i ty. This in terms means any l ine written in the smart contract wil l always be present and can not be modif ied at a later stage.

The main purpose of the PropToken smart contract standard is to issue a unique set of tokens (BSPT) l inked to a specif ic real estate property. A PropToken contract stores property related data ( i .e . cadastral municipal i ty, parcel number, bui lding number, individual part number, property ID and r ight ID) and property holding related data (e .g . company’s registrat ion ID number, company ful l name and company address) . A PropToken contract also stores information regarding al l accounts holding the issued BSPT tokens.

As each separate real estate property occupies a different physical locat ion and is dist inguished by a range of other character ist ics, no two PropTokens are ident ical . To keep track, Blocksquare maintains and curates a digital l ist of al l deployed PropToken contracts .

BlocksQUareproptokeNs (Bspt)

proptokeN staNDarD

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Each new PropToken is made avai lable to users through a PropToken Generat ion Event (PTGE) . Part ic ipat ion in PTGEs is granted in exchange for ETH. The minimum and maximum amount of ETH to be raised are predetermined. In order to achieve fair distr ibut ion, Blocksquare may choose to test var ious models of PTGEs before sett l ing for a standard PTGE model .

The number of PTGEs a user can contr ibute to is subject to the user ’s level . The level is def ined by the amount of BST tokens a user holds (please refer to chapter BST tokens) .

proptokeN GeNeratioN (ptGe)

The Blocksquare system is designed to scale. The more PropTokens there are, the more valuable the Blocksquare network is . The BST token al lows for this growth to be shared with i ts user base and offers a compensat ion method for early adoption. BST tokens are ERC20 standard tokens that power the Blocksquare protocol . They grant access to PTGEs and serve to remunerate generated rent . BST tokens are needed by onl ine real estate partners as l icensing to use the Blocksquare protocol e .g . tokenize real estate and create PropToken Generat ion Events (PTGEs) .

Holding BST on an ERC20 compatible wallet al lows end users to part ic ipate in PTGEs. Part ic ipat ion level thresholds are not predetermined and subject to per iodic recalculat ions based on BST token pr ic ing.

BlocksQUare tokeNs (Bst)

There are only a few ways tokens can f low. (1 ) Straight l ine, tokens are created for a s ingle purpose and destroyed when used. (2) The poker-chip model , where they are used as currency in the system, then the system providers send them back to the cashier to exchange them for cash. (3) Circular, where they exchange back and forth, as with currencies.

The Blocksquare system uses 3 token types to funct ion: ETH, BSPTs and BST. ETH and BST both f low in a circular way, while BSPTs f low similarly to the ‘poker-chip’ model .

ETH is accepted as payment in PTGEs (PropToken Generat ion Events) and proceeds are del ivered to the property sel ler. BSPTs (Blocksquare PropTokens) are distr ibuted back to the PTGE part ic ipants . The distr ibuted BSPTs can then be either (a) traded, or (b) redeemed. BSPT redemption is the result of PropToken Pr ivat izat ion and is subject to certain rules and procedures (see chapter PropToken Pr ivat izat ion) . BST is used to remunerate generated rent (please refer to chapter PropToken Remunerat ion) and can be then either (a) traded, or (b) held to level-up a user ’s account (see chapter BST token) . As rent is l ikely to be collected in FIAT and represents a f low of fresh capital into the cryptocurrency market , BST tokens are expected to gain in demand as the network of tokenized real estate propert ies grows.

tokeN floW

17

With Ethereum and the underlying technical merger of blockchain technology and coded objects, the idea of tokeniz ing real world assets has become real i ty. Transferr ing real world value over the internet poses the need to introduce a system to securely l ink these coded objects, referred to as smart contracts, to the cumbersome structures of var ious nat ional land registr ies .

Ethereum smart contracts are programs run on a blockchain, with unique attr ibutes compared to other forms of software. The program itself is recorded on the blockchain, which gives i t character ist ics l ike permanence, censorship resistance and irreversibi l i ty. Once an Ethereum smart contract is deployed to the blockchain i ts internal logic can’t be changed. This in terms means any l ine written in the smart contract wil l always be present and can not be modif ied at a later stage.

The Blocksquare protocol requires the PropToken issuer to make use of these character ist ics by copying property specif ic information from land registr ies and including i t in a PropToken smart contract . On the land registry s ide, a note containing the PropToken smart contract hash address needs to be added to the t i t le .

Where land registry data is accessible onl ine, the Proof of Tit le

protocol per iodical ly reads this information in the PropToken smart contract and compares i t with information pulled from a trusted source such as the land registry. An external oracle service provider is used to ensure auditable guarantee and connect the outside world with a decentral ized appl icat ion on the blockchain.

Please refer to the Proof of Tit le technical paper for a more in-depth descr ipt ion of the protocol and how we connect PropToken smart contracts with tradit ional land registr ies . The paper can be found here.

proof of title protocol (pot)

18

PropTokens provide a governance funct ion for involved stakeholders to have control over the most important aspects of the underlying real estate property. The decis ions taken may have s ignif icant inf luence over how the investment is managed and the outcomes i t may produce.

Governance for PropTokens takes example from Robert ’s Rule of Order1, but ult imately fol low their programmed governance model . Because vot ing div ides a group into winners and losers, which is not favorable for any collaborat ive environment, vot ing is l imited to those act ions considered absolutely necessary. Most motions are preset and stakeholders can s ignal on the subject at any given moment. The main preset motions are:

• property manager change• revenue stream change• property expenditure

Stakeholders have the abi l i ty to put forward these preset motions by interact ing with the respect ive smart contract . By sending BSPT to the contract the stakeholder votes a request for change, for the property of the sent BSPT. To abstain means to oppose the wish to change, meaning no course of act ion is needed for

1 https://en.wikipedia.org/wiki/Robert%27s_Rules_of_Order

stakeholders that do not wish for a change. Each stakeholder ’s inf luence is weighted by the number of BSPT held on the account used to make the transact ion and not the amount transacted. The proposal is accepted by reaching supermajor i ty consensus based on the ent ire membership i .e . 100,000 BSPT, with a supermajor i ty threshold set at 60%. When the threshold is met, the change request is put forward.

proptoken Governance

The process of changing a property manager involves vot ing on the successor. In an ideal scenario, a commercial property needs to have a competent property manager at al l t imes. To faci l i tate the decis ion-making process for a new property management company, Blocksquare wil l act in the interest of the stakeholders and contact var ious local property managers and present them to the PropToken stakeholders . A vote is then cast on the presented opt ions where each stakeholder ’s inf luence is weighted by the number of BSPT held on the account used to make the transact ion and not the amount transacted. The property manager that receives the highest support of the ent ire membership i .e . 100,000 BSPT is accepted. Blocksquare wil l then coordinate the transit ion process to the new property manager.

PropTokens contr ibute to the Blocksquare Network Reserve Fund set aside for covering scheduled, rout ine and unscheduled expenses related to operat ing, maintaining or improving propert ies in the Blocksquare network. The reserve fund main purpose is to f inance larger expanses that can not be covered from regular rent income.

5% of the proceeds received during a PropToken generat ion event are directed to the reserve fund. After that , the fund controls and maintains al l PropToken balances at al l t imes. Therefore, each remunerat ion of generated rent is subject to an al locat ion to the reserve fund in order for the PropToken to maintain a balance close to i ts in i t ial state. The reserve fund is held in BST tokens, where a certain percentage could be held in other cryptocurrencies to have a more diversif ied fund portfol io .

BlocksQUare NetWork reserVe fUND

proptokeN GoVerNaNce

19

revenue stream change

As with changing property manager, the select ion of an alternat ive revenue stream is subject to vote. Depending on the property type, var ious revenue stream strategies may be adapted for the PropToken in quest ion. In general stakeholders wil l have the abi l i ty to choose between (a) long term and (b) short term tenants, therefore, i f the revenue stream change request is put forward, the property manager company wil l act accordingly to the newly chosen revenue stream.

property expenditure

The abi l i ty of commercial real estate to provide strong rent income has long been one of i ts benefits of inclusion into a long-term portfol io . However, expenditures due to ongoing costs, property repairs and possible improvements can hamper the rent income of commercial propert ies and mislead stakeholders into making misguided decis ions. To control property related expenditures, PropToken stakeholders need to have the abi l i ty to monitor and act on these act iv i t ies directly through the platform powerd by Blocksqaure’s protocol .

ongoing costs

Real estate ownership comes with ongoing costs and bi l ls that should be taken into considerat ion. The good thing is that most of the ongoing costs are recurr ing and can be fair ly well predicted in advance in a commercial property ’s business plan. As this costs cannot be waived, the stakeholders wil l have no on chain governance opt ions. Any decis ions regarding possible changes relate to this expenditure category (e .g . changing electr ic i ty suppl ier, ISP, etc . ) wi l l be placed in the hands of the property management service provider.

The ongoing costs expenditure category includes:

• counci l rates and taxes• uti l i ty bi l ls and connection costs• strata fees• building and contents insurance

property repairs

A repair is maintenance that is necessary to keep the property in working condit ion. Repairs do not add signif icant value to the property or extend i ts l i fe . They are reasonable in amount and are necessary to keep the property in habitable condit ion. Repairs are general ly considered restor ing an i tem to i ts previous good condit ion e.g. ref in ishing a wood f loor, repaint ing a room, repair ing a roof, repair ing exist ing plumbing, repair ing exist ing appl iances, replacing a door knob, replacing a window, replacing a broken smoke detector, replacing rotted f loorboards, replacing cracked f loor t i les etc .

Due to the nature of property repairs , maintenance act iv i t ies

are subject to a lazy consensus approach, where the property manager not i f ies the community of their maintenance intent ions and may proceed i f no one objects before the specif ied deadl ine.Notif icat ions are posted through the Blocksquare powered platform and vis ible on the PropToken’s detai ls page. The benefits of lazy consensus include the fact that in the absence of an object ion the property manager can assume he has consensus. Stakeholders with no object ion and nothing to add to the maintenance act iv i ty need take no act ion.

Lazy consensus removes the r isk of sl ipping into despotism since stakeholders consensus is st i l l required. No major maintenance is made without the impl ic i t approval of the stakeholders and so nobody can protest at a later date.

To faci l i tate property maintenance, an expenditure al lowance is set for the property manager. When maintenance costs are expected to exceed the al lowance, the property manager is required to not i fy stakeholders . The property manager incent ive is to keep stakeholders happy and keep his business and fee collect ion running.

property improvements

An improvement is any type of renovat ion that wil l extend the ‘useful l i fe’ of the property. In theory i t may add value to the property for years to come. Improvements are general ly considered adding something that was not previously there, upgrading something that was exist ing or adapting the asset to a new use. Examples include, but are not l imited to: adding central a ir condit ioning, instal l ing a security system, instal l ing brand new carpet, replacing an ent ire roof, replacing al l exist ing plumbing, replacing al l exist ing electr ic , renovat ing a k itchen, replacing al l windows etc.

Property improvement proposals can be init iated by any stakeholder or the property manager. Improvements are usually more intensive than repairs , involve greater costs and are general ly bound to geographic locat ion of the property. Therefore, improvement proposals are expected to be carr ied out by the property manager on behalf of the stakeholders, where the stakeholders are required to vote on the presented improvements. Each stakeholder ’s inf luence is weighted by the number of BSPT held on the account used to make the vote transact ion and not the amount transacted. The improvement proposal that receives the highest support of the ent ire membership i .e . 100,000 BSPT is accepted.

Property improvement costs are paid from the Blocksquare Network Reserve Fund. For safety purposes, Blocksquare retains veto power on any property improvement decis ions and overlooks the f inancing and improvement implementat ion process.

20

PropToken Pr ivat izat ion is the process of transferr ing one’s property r ights off chain . In terms this means one must redeem 100,000 tokens of an individual PropToken. The motion for PropToken Pr ivat izat ion can be in it iated by a major i ty stakeholder control l ing at least 80,000 BSPT.

The major i ty stakeholder can choose to place a tender offer through a smart contract to acquire the remaining 20% of BSPT in circulat ion, usually at a premium from current market pr ice, giv ing minority stakeholders enough incentive to sel l . For the Tender Offer Contract to succeed, the major i ty stakeholder needs to come to control at least 90% of the total 100,000 BSPT. Blocksquare wil l then help and offer guidance to the major i ty stakeholder troughout the PropToken Pr ivat izat ion process.

To in i t iate a Tender Offer Contract (TOC), the major i ty stakeholder needs to set-up the Tender Offer Contract by select ing the start date, end date and PropToken address. The major i ty stakeholder needs to then send the total amount of ETH intended to sett le before the tender offer start date. Once the ETH transact ion is conf irmed, the minority stakeholders can begin sending their tokens. The Tender Offer Contract awards a bonus to favour early sel lers based on the fol lowing bonus schedule:

• Day 1 = 20% bonus• Day 2 = 15% bonus• Day 3 = 10% bonus• Day 4 = 5% bonus• Day 5+ = no bonus

The bonus can be considered as a real locat ion method of the premium offered by the major i ty stakeholder. The bonuses are calculated after each bonus period ends, fol lowing distr ibut ion of BSPT and ETH to part ic ipants and Tender Offer Contract in i t iator (major i ty stakeholder) .

The Tender Offer Contract rewards early act ion in a fa ir manner, meaning, i f al l remaining BSPT tokens were to be sent dur ing the same day, al l minor ity stakeholders would get the same amount of ETH proport ionally to their BSPT share.

A Tender Offer Contract ends when one of the fol lowing condit ions is met :

• I f the in i t iator succeeds and holds at least 90,000 BSPT by specif ied end date, the TOC lasts unt i l the last BSPT token is sent to the tender offer in i t iator.

• I f the in i t iator fa i ls to receive at least 90,000 BSPT by specif ied end date, the TOC ends at specif ied end date.

This means, once the 90% threshold is reached, the major i ty stakeholder is deemed as the sole stakeholder. Any ent i ty st i l l holding BSPT may claim i ts compensat ion through the TOC, as the TOC wil l be avai lable up unt i l the last BSPT is transacted.

In order to receive the green l ight for PropToken Pr ivat izat ion, the major i ty stakeholder is required to offer ETH as compensat ion through a TOC even in events where he or she comes to hold

proptokeN priVatizatioN

90,000 BSPT without in i t iat ing a Tender Offer Contract ( i .e . buys them on the decentral ized exchange) . To mit igate r isk of foul play in such scenarios, Blocksquare calculate the minimum ETH compensat ion amount and set-up the TOC.To better understand how the Tender Offer Contract calculates bonuses, we created a s impl i f ied spreadsheet calculator that you can review here. Even though the spreadsheet calculator does take into account for Blocksquare fees, please note i t does not do so for Ethereum network fees.

21

Holding BSPT tokens of a specif ic PropToken contract , enables the holder to collect BST tokens generated by the l inked real estate property. Blocksquare uses transact ion and accounting data recorded on the Ethereum blockchain to calculate per account BST al lowances, based on the user ’s BSPT portfol io .

BST tokens al low users to exercise their r ight to use any avai lable property within the Blocksquare Network in a s imilar manner as points in a t imeshare vacat ion club funct ion. Therefore, the BST token al locat ion of a BSPT token holder can be regarded as a tokenized representat ion of their r ight-to-use. The user may decide i f and how to use propert ies by transferr ing their BST tokens. BST tokens can also be sold at any t ime on any exchange l ist ing the BST token.

Apart from being rented-out, any avai lable short-term rental property within the Blocksquare Network can also be reserved and used by BSPT token holders . Timeslots at these propert ies are reserved on a f i rst-come basis in exchange for BST tokens. A user ’s r ight-to-use is distr ibuted in form of BST tokens based on the holding period of each set of BSPT tokens in a portfol io .

Some BSPT tokens produce more BST than others depending on the underlying property performance. BSPT holders can inf luence a PropToken performance by regularly monitor ing act iv i ty and wielding their government r ights (see chapter Property Governance) .

In order to achieve permissionless l iquidity of tokenized real estate assets, a decentral ized exchange protocol is integrated within the Blocksquare system. The exchange protocol used for development is the 0xproject .org open source protocol .

The documentat ion of the 0x exchange protocol can be found here and the abstract from the whitepaper quotes:

“. . .a protocol that faci l i tates low fr ict ion peer-to-peer exchange of ERC20 tokens on the Ethereum blockchain . The protocol is intended to serve as an open standard and common bui lding block, dr iv ing interoperabi l i ty among decentral ized appl icat ions (dApps) that incorporate exchange funct ional i ty. Trades are executed by a system of Ethereum smart contracts that are publ icly acces- s ible, f ree to use and that any dApp can hook into . DApps bui l t on top of the protocol can access publ ic l iquidi ty pools or create their own l iquidi ty pool and charge transact ion fees on the result ing volume. The protocol is unopinionated: i t does not impose costs on i ts users or arbitrar i ly extract value from one group of users to benef i t another. Decentral ized governance is used to cont inuously and securely integrate updates into the base protocol without disrupt ing dApps or end users .”

proptokeN reMUNeratioN proptokeN riGht-to-Use

proptokeN DeceNtralizeD exchaNGe

Blocksquare wil l l imit exchange services only to BSPT/ETH pairs to ensure easier order matching, but ult imately a user can choose to place a buy/sell BSPT (Blocksquare PropToken) order with a custom cryptocurrency pair through any decentral ized exchange protocol support ing ERC20 tokens.

22

The Blocksquare system establ ishes a network of tokenized real estate propert ies, that use the Proof of Tit le protocol to l ink property specif ic smart contracts cal led PropTokens to land registr ies . The protocol al lows platforms to bui ld on top and integrate into the network benefit ing from var ious out of the box blockchain based funct ional i t ies . A user may be classif ied as a (1 ) Platform provider, (2) Service provider, or (3) Regular user.

Platform providers are cert i f ied users that have the r ight to issue new PropToken contracts and organise PropToken Generat ion Events (PTGEs) .

Service providers are cert i f ied users that offer var ious services within the Blocksquare network. In i t ial ly these wil l be l imited to property management companies, property t i t le holding companies and PropToken val idators . Val idators are BST stake holders wil l ing to stake their BST in order to val idate a certain PropToken contract before i t gets deployed.

In future, service providers may also come as real estate big data providers, IoT solut ion providers or companies developing AI for real estate markets .

Regular users are users of any platform powered by Blocksquare. They are al lowed to search the Blocksquare network of propert ies, access ongoing PTGEs (PropToken Generat ion Events) , use PropToken r ights (property access and governance) and trade BSPT tokens powered by the PropToken Decentral ized Exchange.

BlocksQUare NetWork participaNts

23

fiNaNcials

In order to achieve profitability a fee collection system is integrated into the Blocksquare system providing 2 main revenue streams:

• BSPT trade transact ion fees• PropToken generat ion event fee• PTGE val idators fee

Bspt trade transaction fee

Trading PropTokens is subject to fees. The transact ion fee is implemented into the PropToken contract . Whenever a transact ion from one account to another is in i t iated, a 2% fee is col lected from the in it iator and spl i t in the fol lowing manner :

• 0 .3% → PropTokenCreator incent iv ises real estate experts to use Blocksquare and sel l their propert ies as tokens.

• 0.3% PropToken First Buyers incent ive to part ic ipate in PropToken Generat ion Events (PTGEs) and f inance tokenizat ion of real estate propert ies .

• 0 .4% → BlocksquareFoundation funds used to cover development, maintenance and promotion of Blocksquare.

• 1% → BlocksquareNetworkReserveFund funds used for cover ing scheduled, rout ine and unscheduled expenses related to operat ing, maintaining or improving propert ies in the Blocksquare network. The reserve fund main purpose is to f inance larger expanses that can not be covered from regular rent income.

proptoken generation event fee

Creat ing a PropToken generat ion event is subject to a 1 ,5% fee based on the total amount raised. This fee al lows Blocksquare to offer proper customer support to real estate experts . Once the tokenizat ion tools and processes are ful ly automated, Blocksquare wil l be able to omit this fee.

ptGe validators fee

Creat ing a PropToken generat ion event is subject to a 0,5% fee based on the total amount raised. This fee is distr ibuted to PTGE val idators that ver i fy al l property t i t le related documents and procedures are val id . The val idator must place a stake ( in BST tokens) in order to be el igible for val idat ion. The reward fee is spl i t amongst part ic ipat ing val idators .

reVeNUe streaMs

25

Blocksquare is creat ing the needed infrastructure to k ickstart and support a new market where CRE is sold in a tokenized fashion, decreasing secondary market trade fr ict ion, increasing asset l iquidity, thus unlocking value. This unlocked value wil l push real estate professionals to leverage Blocksquare, but only i f they see long term potent ial in doing so. Therefore, the fees structure needs to establ ish and al ign incent ives for market makers .

BlocksQUare Market strUctUre

Average PropToken value at PropToken Generat ion Event (USD) 500,000

Blocksquare Market participants incentives

assumptions:

total 2%

500,000

10,000,000

2,737,500,000

3,650,000,000

250,00,000,000

2,500,000,000

2,737,500,000

fee omitted

1,250,000,000

5,475,000,000

3,650,000,000

9,125,000,000

19,5 billion

year 5

70,000

1,400,000

383,250,000

511 ,000,000

35,000,000,000

350,000,000

383,250,000

525,000,000

175,000,000

766,500,000

1,036,000,000

1,277,500,000

3,2 billion

year 3

5,000

100,000

27,375,000

36,500,000

2,500,000,000

25,000,000

27,375,000

37,500,000

12,500,000

54,750,000

74,000,000

91,250,000

232 million

year 2

2%

0.3%

0.3%

1%

1%

25,000

0.4%

0.5%

1.5%

Total BSPT exchange transaction fees:

PropToken Propert ies

Number of Act ive Users

PropToken Issuer fees (Exchange)

PropToken Exchange fees

Total PropToken Market Cap (USD)

24h Exchange Volumes (USD)

PropToken First Buyers fees

PropToken Generat ion Events - Blocksquare fees

PropToken Generat ion Events - Val idators fees

Distr ibuted to Network Part icipants (USD):

Assumptions:

Blocksquare Revenues (USD):

Blocksquare Network Reserve Fund (USD)

total annual Market turnover (UsD)

PropToken Generation Event (PTGEs) fees:

I . PropToken Issuers (e .g . cert i f ied RE professional)

I I . PropToken First Buyers (part ic ipants in PTGE)

24h market exchange volume (~1/3 of current cryptocurrency 24h exchange vol . )

I I I . Blocksquare Network Reserve Fund

Average per user total investment (USD)

IV. Blocksquare

PropToken Generat ion Events - Val idators fees

PropToken Generat ion Events - Infrastructure Provider fees (Blocksquare)

Blocksquare Market simulation

26

The total supply of BST tokens effect ively represents 100% of the network’s . BST tokens al low users access to the network and i ts services. The received funds wil l be used to further develop the needed infrastructure, grow the user base and expand the network. We currently foresee the expenditure of collected funds to be directed in for the fol lowing act iv i t ies :

presale( Idea Development, MVP, Product Ident i f icat ion, Marketplace Orientat ion, Demographic Target ing, Team Creat ion, Crowdsale Market ing, Community Growth)

series a(Product Developent, Alpha/Beta Test ing, Market Val idat ion, Team Expansion 1)

series B(Off ic ial Release, Product Distr ibut ion, Market Growth, Team Expansion 2)

future series (c, D, e...)(Product Optimizat ion, Global izat ion, Acquis i t ions, Global Growth)

Multi-series token sale model

Blocksquare wil l fol low a mult i-ser ies token sale model to distr ibute the BST token and raise funds for development. The main goal is to accommodate long term growth by al lowing gradual runway extension. Based on our analysis of previous token sales, we evaluated that ra is ing funds in mult iple token

startUp fUNDiNG

presalefebruary 2018

5,000,000 Bst5% of total supply

target funding 500k USD

series aapril 2018

10,000,000 Bst10% of total supply

target funding 5MM USD

fUtUre series2019+

40,000,000 Bst40% of total supply

target funding 100MM+ USD

distr ibut ion events can have a s ignif icant impact on our abi l i ty to del iver a global network for the real estate industry.

You can read more about our research on the topic, the motivat ions behind i t and s imulat ions based on previous coin offer ings data in the blog post t i t led “ ICOs, don’t bite off more than you can chew.” by Blocksquare’s co-founder Denis Petrovcic .

The token sale model is set to distr ibute 60% of the total BST token supply using the below distr ibut ion schedule.

Motivations for a multi-series token sale model

Angel investors and VCs tradit ionally fund new companies in mult iple rounds. They offer in i t ial seed capital to let a team prove i ts concept, develop a working prototype, val idate the market , and only after the team shows the capabil i ty, they’re able to raise more funds to grow and establ ish the business further. This way the bui lding and funding i terat ion keeps al l involved part ies motivated to achieve and del iver on promises made.

Taking our funding goals through mult iple funding rounds helps Blocksquare stand out as a long term project . Our team’s incent ive is to keep pushing and earn the r ight to go for the next funding round. Last but not least , i t sends a clear message to the interested community that the team is focused on del iver ing.

27

MUlti-series tokeN sale MoDel

fUtUre series2019+

40,000,000 Bst40% of total supply

target funding 100MM+ USD

projected Bst price

presale

0.00 USD

1.00 USD

2.00 USD

3.00 USD

4.00 USD

5.00 USD

0.10 UsD0.50 UsD

1.35 UsD

2.16 UsD

4.32 UsD

Series A

set pr ice, before BST tokens hit exchanges

projected market pr ic ingto match funding targets in above chart

Ser ies B Series CFuture

Rounds

funding targets & distribute Bst tokens per series

presale

5MM BST 25MM USD

10MM BST 50MM USD

15MM BST 75MM USD

20MM BST 100MM USD

Series A Series B Series CFuture

Rounds

series aapril 18th 2018

10,000,000 Bst10% of total supply

target funding 5MM USD

presalefebruary 2018

5,000,000 Bst5% of total supply

target funding 500k USD

28

role of token: ut i l i ty, access, l icense, currencytoken total supply: 100,000,000 BSTsymbol: BSTBlockchain: Ethereumtoken standard: ERC20

Bst tokeN Details

Bst token distribution chart

The Blocksquare system has a total supply of 100,000,000 BST, that wil l be released into circulat ion through mult iple token sale events in 6-12 month intervals . We decided to fol low this approach to reach a wide set of goals as we progress and develop Blocksquare into a global standard for real estate tokenizat ion, but also to al low i t to have an impact on the token economics and token demand r ight from the start .

•60%oftheBSTtotalsupplywil lbedistr ibutedovert ime•10%wil lbeusedforbountiesandrewards•30% is al locatedforcurrentandfutureteammembers•4yearsvest ing, with1 yearcl i f f foral l teammembers

100,000,000 BST

29

Use of fUNDs

Marketing & User acquisitions

30%

Business Development

26%

5,000,000 USDproduct Development

44%

Funds raised during our Ser ies A wil l be used to take Blocksquare one step further in business development, provide l iquidity of the BST token through exchange partners and establ ish a strong presence, tokeniz ing real estate through establ ished RE companies. Our product is now near ready and we expect the have f i rst tokenized real estate deals on the market by end of Q2 2018.

Our work wil l focus on attract ing internat ional onl ineinvestors to become users and buy into tokenized real estateinvestment opportunit ies . We bel ieve our presence wil l furthersupport the country ’s mission to support blockchain innovat ion.

30

Denis petrovcicMSc in Architectural Engineering • co-founder • CEO

I consider myself to be a forward thinking, open minded person with an entrepreneurial spir i t and passion for the unknown. I bel ieve the path to reach our goals wil l always exceed the goal i tself, making our journey just as important as the dest inat ion we want to reach. Today, with the experience gained by co-founding and managing a restaurant , fa i l ing an onl ine market ing start-up, successful ly launching a web-based energy cert i f icat ion service, leading & designing a proposal project for the world’s highest indoor ski s lope and successful ly invest ing-in, sett ing-up and managing a student accommodation business, I focus on bui lding a future where real estate investments are open to anyone.

Viktor BrajakMSc in Computer Science • co-founder • CTO

Co-owner and COO at Medius Inc - a Java Middleware and Appl icat ion Integrat ion software engineering company special ized in development, design, implementat ion and integrat ion of the most complex enterpr ise IT solut ions. I am special ized in development, design, implementat ion and integrat ion of information systems. I see blockchain technology as an undeniably ingenious invent ion that is set to change the way we use the internet and my team at Medius is here to help develop this future to come.

Medius incEstablished 2002 • Full Stack Development Team • 20+ Experts • Proven Track Record

Medius Inc is a software development company special ized in IT projects based on open source Java technology. Our focus is exclusively on Agile Software Engineering: Design, Development, Test ing, QA, Deployment and Maintenance of custom software systems, based on JEE technology. Al l our projects use concepts of custom developed business procedures and process models . By using our development tools we can easi ly create and publ ish electronic forms in real-t ime, access related data stored in external off ic ial registr ies, digital ly s ign documents, customize business process orchestrat ion and f low, classify and retr ieve documents, def ine complex data models and dict ionar ies, etc .

the foUNDers

We are a team of dedicated professionals, entrepreneurs, pr ivate real estate investors, digital currency enthusiasts levaraging blockchain technology to make real estate hassle free and avai lable to everyone, everywhere.

Our team is dynamic, distr ibuted and always on the look for qual i ty individuals that can br ing value to the team and help us on our mission. I f you bel ieve you can contr ibute please feel free to contact us .

Blocksquare is being developed by Medius Inc, a software development company special ized in IT projects based on open source Java technology.

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tM forum excellence awards - finalist

T e l e c o m m u n i c a t i o n Management Forum Excellence Award is awarded to the communicat ions service provider, demonstrat ing the most innovat ive and effect ive use of TM Forum Framework, to del iver tangible cost reduct ion, eff ic iency improvement, and operat ional agi l i ty. In 2010, Medius and Telekom Slovenia have been nominated for the TM Forum Excellence Award for project “Automator - NGOSS Orchestra for Fulf i l lment Automation”.

United Nations public service award

The United Nations Public Service Award is the most prestigious internat ional recognit ion of excellence in publ ic service. I t rewards the creat ive achievements and contr ibut ions of publ ic service inst i tut ions that lead to a more effect ive and responsive publ ic administrat ion in countr ies worldwide. In 2013, Slovenia has won a golden award thanks to a project “The Tray” which is the most important part of the whole solut ion, and was designed, developed and implemented by Medius.

e.com cert

In 2010, MEDIUS has been awarded ISO 9001/2008 cert i f icate, for “Development, Implementat ion, Integrat ion, and Support of IT Systems, using Open Source Java Technology”. I t clearly demonstrates company’s v is ion and dedicat ion to development standards, constantly str iv ing to del iver effect ive business solut ions that generate customer value.

eurocloud award 2016

Medius’ CloudSE solut ion awarded as the best European cloud service in the category “Best Cloud Services provided by Start-Up CSPs”. Nominees and the winners are determined by the paneuropean jury from part ic ipat ing countr ies composed of independent experts from different cloud expert ise and dist inct ion. Over 30 Cloud solut ion providers from al l over Europe have competed in the 2-t iered competit ion - nat ional and European.

headquarters: Tehnoloski park 21 , 1000 Ljubl jana, Sloveniaemployees: 20annual sales : Over 1 .2MM EURVat iD: SI 55773567registration Number: 1685325

Medius, Java Middleware and Appl icat ion Integrat ion Inc. , is a software engineering company special ized in development, design, implementat ion and integrat ion of the most complex enterpr ise IT solut ions.

Medius Inc started blockchain technology R&D act iv i t ies with i ts team of 20+ developers in late 2016 and today offers consult ing and development services in the f ield aiming to become a recognized leader combining on-chain and off-chain enterpr ise solut ions to i ts high prof i le customer base.

foUNDiNG partNer: MeDiUs iNc “Founded in 2002, Medius is today one of the most recognized brands in the region offering custom development solutions based on open source Java technology.”

- Viktor Brajak, COO, Medius Inc

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QUestioNs? We haVe aNsWers.

future@blocksquare.io

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